Below are sovereign bond yields for select countries with negative interest rate policies. The graphs show the yield curves for those sovereign bonds today (green line) versus where they were last year (yellow line).

German 10yr:

6/9/15: 0.949%

Today: 0.037%

Click images to enlarge.

Japanese 10yr:

6/9/15: 0.448%

Today: -0.131%

Swiss 10yr:

6/9/15: 0.211%

Today: -0.48%

How This Whole thing Shakes Out is anyone's guess.

The Great Debate: Reflation Versus Deflation

Good thing the jobs number was a bomb.

Heading into today SPY was up for 5 of the last 6 days on a massive reflation move that squashed the dollar as investors bet Dovish Fed = Down Dollar = Stocks Up. The U.S. Dollar index is down -1.7% since then.

But with the dollar up today, the reflation trade has been unravelling a bit.

Where do we go from here?

Here's analysis via Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning.

"With USD signaling immediate-term TRADE oversold this wk, did we see the final push/capitulation/chase in all things Down Dollar Dovish Fed, or is reflating the former bubble just getting started? Sounds like a Q3 Hedgeye Macro Theme in the works… Oil +41% in the last 3 months but Copper -6.4% - demand?"

A Closer Look At Consensus Positioning (& Why We Completely Disagree)

Takeaway:Consensus is overwhelmingly long the S&P 500 and short 10yr Treasuries. Don't do that!

Consensus is overwhelmingly long the S&P 500 and short 10yr Treasuries.

Before you dogpile in on that. Consider where we're at...

In her most recent speech, Fed head Janet Yellen expressed concern about the jobs market, while reiterating that the Fed is data dependent. In the past six months, the Fed pivoted from Hawkish (in December) to Dovish (March/April) to Hawkish (May). Market consensus now perceives Yellen and the Fed as flipping back to Dovish in June.

So, what’s an investor to do?

The Fed is perpetuating volatility in macro markets, so stick with what’s worked all year, Long Bonds (TLT). Stating the obvious, that is the exact opposite of how Macro consensus is positioned. TLT has been our most vocal macro call for a while now and has served us well. It is up around 11% YTD versus 3% for the S&P 500.

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[UNLOCKED] Keith's Daily Trading Ranges

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Subscribers now receive risk ranges for 20 tickers each day- the last five of which are determined by what's flashing on Keith's screen and by what names subscribers are asking about. Click hereto subscribe.

"We are loudly reiterating our call that the unwind of ZIRP and QE will continue to deflate the easy money credit boom it fabricated in the form of continued recessionary earnings growth as the business cycle gets dangerously long in the tooth."

Takeaway:Evidence of #GrowthSlowing? Japanese and German equity markets are tumbling and the 10yr/2yr Treasury yield spread is pancaking.

We've been hearing for a while now, from various pundits and prognosticators, that "global demand has bottomed." The problem with that argument is that it just isn't born out by the facts.

Setting aside that economic indicators around the world are rolling over, simply looking at the massive drawdowns in global equity markets could satisfy even a casual observer's curiousity that all is not well.

Here's analysis from Hedgeye CEO Keith McCullough in a note sent to subscribers earlier this morning:

"I know. When trying weave the “global demand has bottomed” narrative about US stocks, you have to ex-out things like Japanese and German Equities (and their bond yields hitting all time lows) – small details I’m sure, but both Nikkei and DAX down another -1% today and down -20% and -19%, respectively, from last year’s highs."

Take a look at the Nikkei...

And Germany's DAX...

Clearly, global demand has not bottomed...

Here's the most obvious #GrowthSlowing indicator. The 10yr to 2yr Treasury yield spread is pancaking, with the yield on the 10yr at 1.669% this morning.

More to be revealed.

(FYI: Our biggest Macro call, Long Bonds (TLT) is breaking out to new highs today.)

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